Financial Literacy

Health Maintenance Organizations (HMOs) are similar to PPOs, but they limit you to using the doctors and the medical facilities in the HMO. Their objective is to provide comprehensive medical care at a predetermined price. You are typically required to choose a primary care physician from the HMO when you join the plan. That doctor is responsible for managing your care. In other words, you are required to visit that doctor or obtain a referral from him or her before seeing a specialist.

HMOs come in different shapes and forms, too. Sometimes, the HMO doctors are housed under one roof and are employees of the HMO, while other HMOs contract with individual and group practitioners. How the HMO is organized may influence part of your decision in electing this form of coverage.

Covered services vary by HMO, but generally, joining an HMO offers you these advantages:

• For each office visit, you pay a small flat fee with no deductible. Your hospital stays are usually covered at 100%. Deductibles and coinsurance, typically found in traditional group plans and PPOs, do not apply to covered procedures and services.
• Preventive care is not only covered, it is encouraged. Services such as physicals, immunizations, and routine pediatric care are covered at 100% or for a nominal flat fee.
• Your paperwork burden is reduced since there are generally no forms to fill out.

Due to the comprehensive coverage provided, joining an HMO may be right for you. But be careful: your premiums will be higher than your other plan choices. Before you make the decision to join, make sure you have carefully evaluated the trade-off of your increased premium costs against the added coverage you will be receiving. Carefully review the HMO's list of covered services and participating doctors and hospitals.